Correlation Between Vera Bradley and Starbucks
Can any of the company-specific risk be diversified away by investing in both Vera Bradley and Starbucks at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Vera Bradley and Starbucks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vera Bradley and Starbucks, you can compare the effects of market volatilities on Vera Bradley and Starbucks and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Vera Bradley with a short position of Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vera Bradley and Starbucks.
Diversification Opportunities for Vera Bradley and Starbucks
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vera and Starbucks is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Vera Bradley and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks and Vera Bradley is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Vera Bradley are associated (or correlated) with Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of Vera Bradley i.e., Vera Bradley and Starbucks go up and down completely randomly.
Pair Corralation between Vera Bradley and Starbucks
Considering the 90-day investment horizon Vera Bradley is expected to under-perform the Starbucks. In addition to that, Vera Bradley is 1.15 times more volatile than Starbucks. It trades about -0.02 of its total potential returns per unit of risk. Starbucks is currently generating about 0.02 per unit of volatility. If you would invest 9,563 in Starbucks on September 4, 2024 and sell it today you would earn a total of 588.00 from holding Starbucks or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vera Bradley vs. Starbucks
Performance |
| Timeline |
| Vera Bradley |
| Starbucks |
Vera Bradley and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vera Bradley and Starbucks
The main advantage of trading using opposite Vera Bradley and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vera Bradley position performs unexpectedly, Starbucks can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Starbucks will offset losses from the drop in Starbucks' long position.| Vera Bradley vs. Rocky Brands | Vera Bradley vs. Steven Madden | Vera Bradley vs. Wolverine World Wide | Vera Bradley vs. Caleres |
| Starbucks vs. Hyatt Hotels | Starbucks vs. Smart Share Global | Starbucks vs. Sweetgreen | Starbucks vs. Wyndham Hotels Resorts |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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